Closer integration between euro members could “undermine” the European Union’s
free market rules and threaten the City of London, ministers have warned.

David Cameron will attend a special EU summit tomorrow to discuss the eurozone crisis, and warn the 17 countries using the single currency not to cut the other ten EU members out of major decisions.

Moves towards closer co-ordination of economic policies and fiscal systems have increased fears of a two-speed Europe, where the EU is divided between a core of euro nations and a fringe of countries outside the single currency.

The summit had been scheduled only for the 17 euro governments. But at a bad-tempered meeting on Sunday, Mr Cameron won an agreement for a meeting tomorrow of all 27 EU members too.

Ministers are concerned that the eurozone countries will integrate their policies more closely and operate as a “caucus” within the EU, making decisions without consulting non-euro members like Britain.

Those could include protectionist measures such as higher taxes on imports and tighter market regulations, which would hurt the single market, British officials fear. In particular, the UK worries that a “euro-core” group could try to impose regulations on financial services that would end the City of London’s status as a global financial centre.

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William Hague, the Foreign Secretary, said the UK wanted to stop power being concentrated in the eurozone. “Our first priority is to ensure that those decisions that ought to be made by the 27 are made by the 27 and not by the 17,” he said.

The Prime Minister’s official spokesman said he had insisted on an all-EU meeting tomorrow to remind the eurozone nations about the importance of the single market and the need for major decisions to be taken by all 27 members.

He said: “The issue is: because the members of the eurozone are very focused on the issues they face, will they take decisions that affect all 27? Could they take decisions which in some way undermine the single market? We want to make sure that does not happen.”